It’s always good to win – and today is one of those days!
This afternoon Rishi Sunak stood up in the House of Commons and promised to introduce a windfall tax on profits racked up by the energy giants.
This is a huge win. The Chancellor also announced a £15 billion package of support, including a £400 discount on energy bills for all and a £650 one-off payment to the poorest eight million households.
It will be paid for in part by the new windfall tax on North Sea oil company profits. This will help millions of people struggling with skyrocketing bills.
The new windfall tax will raise £5 billion this year. This is a big step forward, even if it’s only bringing in half the amount we wanted to see a windfall tax raise and there are problems with how it’s designed.
It’s not over yet
The plan has to be voted through Parliament, probably in the autumn.
So we’ll have plenty of opportunities to push for a higher rate on energy giants as the windfall tax is debated in Westminster.
We’re not going to stop pushing for energy giants to pay their share. This has to be part of broader efforts to support people in the long term with the cost of living scandal.
We couldn’t have done it without you
This is our third significant campaign win in less than 12 months. Last year we forced the government to back a minimum tax for global companies. In March we won a clampdown on dirty money with the implementation of the Economic Crime Bill.
We've tweeted about how we forced the government into these three u-turns here.
Today proves that when we work together with others in our movement, including Uplift, 350.org, Fuel Poverty Action and Greenpeace, we can achieve real change.
It’s no small thing and we couldn’t have done it without our supporters help. From reading this newsletter, to signing our petition or donating to us. It all counts, so thank you.
(Image courtesy of HM Treasury's Flickr)
Robert Palmer, Executive Director at Tax Justice UK, commented on the Chancellor’s announcement saying:
“The Chancellor has finally responded to campaigners' demands for a tax on the bumper profits of oil and gas producers.
“But Sunak's levy of £5bn still leaves shareholders pocketing billions in freak profits at the expense of struggling bill-payers.
“This one-off minimal tax falls far short. We need sustained reforms to make the tax system fairer, more support for people with ballooning bills and help with the transition to net zero.”
Further commentary from Robert on the announcement here.
A tax on excess profits by energy companies could cancel out the planned October energy price increase, new analysis by Tax Justice UK has found.
News that energy prices are likely to rise again in October has added to fears that the cost of living crisis is likely to get worse in the coming months.
However, analysis by Tax Justice UK has found that a 95% tax on the excess profits made by North Sea oil and gas producers could wipe out up to 90% of the predicted increase in energy bills.
Government statistics predict the north sea oil giants could rake in as much as £19.5 billion this year, which is £13.6 billion in excess of what they made over the preceding decade when they averaged £5.9 billion a year.
If set at the right level an excess profits windfall tax on this additional £13.5 billion profit made during a cost of living crisis, could wipe out most of the additional energy price increase predicted to hit people in coming months.
A 95% windfall tax on these profits would generate £12,866m, nearly wiping out the £14,242 million extra cost to all consumers that some have predicted in coming months.
Moves to implement an excess profits tax like this has been supported by other groups including 350.org, Fuel Poverty Action and Church Action for Tax Justice.
Tax Justice UK Head of Advocacy, Tom Peters, said: “UK oil and gas companies are announcing bumper profits, while millions of people make impossible choices about whether to heat their homes or put food on the table.
“Two companies alone have announced profits equivalent to £100,000 a minute so far this year.This isn’t a cost of living crisis, it’s a cost of living scandal.
“The government must act, by introducing a windfall tax on the extra profits that these companies are generating through luck. This would raise funds that could ease the pressure of rising energy bills for millions.”
Estimated total profits from north sea oil and gas producers over 2022 is taken from the OBR’s Economic and Fiscal Outlook, March 2022. This predicts that government revenues arising from a 40% tax rate will be £7,800m (pg.108), suggesting a total projected profit from north sea oil and gas of £19,500m in 2022/23.
‘Excess profits’ have been calculated by averaging profits over ten years using North Sea Transition Authority data. The average annual profits of oil and gas producers in the UK between 2010/11 and 2020/21 was £5,956m. This means an ‘excess profit’ expected this year (£19,500m - £5,956m) = £13,543m
A 95% windfall tax on these excess profits would generate £12,866m, over and above the normal tax applied to ‘normal’ profits.
Ofgem increased the energy price cap by an average of £693 to £1,971 for 18 million customers, and £708 to £2,017 for 4.5 million prepayment customers in April.
Cornwall Insights’ widely publicized analysis predicts that the price cap will be increased to £2,600 in October, which would increase costs by an average of £633 per customer across both tariffs. This would increase the amount paid towards energy costs by 22.5 million consumers by a total of £14,242m. The £12.9bn additional revenue from a 95% windfall excess profits tax would cover 90% of this increase.
If the price cap rises to £2,800, as per the prediction of Ofgem’s Chief Executive, then revenue of £12.9bn from an excess profits tax would cover 70% of the increased amount paid towards energy by customers from October.
New Economics Foundation research showing that 23.5m people will be unable to afford the cost of basic essentials by the end of the year - https://neweconomics.org/2022/03/spring-statement-leaves-48-of-all-children-living-in-families-that-have-to-make-sacrifices-on-essentials-this-spring-like-putting-food-on-the-table-or-replacing-clothes-and-shoes
BP and Shell have announced profits of £4.9bn and £7.3bn respectively in the first quarter of this year, totalling £12.2bn. Dividing this by 90 days, then 24 hours, then 60 minutes = £941,358 per minute.
Red Wall voters want the government to bring in a windfall tax on energy companies with the proceeds used to help people who are struggling financially.
A poll carried out by Survation for Tax Justice UK found that 79% of Red Wall voters support a windfall tax on energy companies including 84% Conservative and 85% of Labour voters.
The message is clear. People in the Red Wall want to see a windfall tax on the bumper profits made by Shell and BP.
The money raised should be used to support people struggling with rising bills. Given the local election results, the pressure is only going to increase on the Prime Minister and Chancellor to do something now.
This needs to be part of a broader package to move away from our reliance on oil and gas, which is a real vulnerability given the war in Ukraine and the climate crisis. The energy giants need to be paying their share of the costs of moving to a more sustainable future
The poll was held before it was revealed this week that BP and Shell made more than £12 billion in profits in the first three months of 2022.
The sample size was 1,015 via online panel between 22nd and 28th April 2022. The data was weighted to the profile of adults aged 18+ in the Red Wall area. Data were weighted by age, sex, region, 2019 General Election Vote and 2016 EU Referendum Vote.
Download the full results:
It's been a windfall week for the giant energy companies after BP and Shell announced profits of £12 billion in the first three months of 2022.
That’s £133 million a day or nearly £100,000 every minute. These excess profits are driven largely by the war in Ukraine and surging energy prices.
At the same time as the energy giants are making billions in profits, millions of families can’t keep up with their bills. Energy, food, fuel and other everyday costs are soaring. From pensioners to children, too many are being plunged into poverty as a result. Many people are left with the choice between heating their homes or feeding their families. This is a scandal.
The pandemic showed that politicians can choose to support people when times are tough. The government has to act.
This is why we’ve decided to take action. With our friends at 38 Degrees and we’ve set up a petition that we would love you to sign up to.
We need fair taxation to tackle this cost of living scandal. Sign our petition here.
Boris Johnson and Rishi Sunak must do more to help people struggling to pay their bills. They should pay for this by levying a windfall tax on the bumper profits of the energy giants.
It should be part of a broader package to make the tax system fairer by cracking down on tax dodging, closing tax loopholes and ensuring the wealthy pay their share.
We’ve been in the media all week making the case for a windfall tax and it’s becoming harder to see why the government hasn’t acted yet.
Our Head of Movement and Partnerships, Sara Hall, made the case to LBC News. Our Head of Advocacy spoke to Talk TV’s Julia Hartley Brewer. There’s growing support across the political spectrum for action.
This is not an issue that we are prepared to drop. Add your voice to the chorus of people calling for a windfall tax on energy company profits.
This week the 2.5% increase to National Insurance Contributions took effect.
It is really important to emphasise that this was a political choice and other options were available to the government to help fund social care.
It would have been better if the government had closed the tax loopholes used by the wealthy and aligned capital gains tax with income tax. This could raise roughly the same amount as the National Insurance increase - £11 billion.
It comes in the same week it was revealed that Shell received more than $120 million in subsidies from the UK Treasury in 2021, despite record gas prices and high oil prices.
So, in the year Shell made $19.3 billion in profit, they paid zero tax. Instead, the UK government paid Shell more than $120 million.
This revelation only adds to pressure on Boris Johnson and Rishi Sunak to impose a windfall tax on oil and gas companies. This would raise money that could go to supporting struggling people around the country. We are joining with campaigners from the climate movement and others to force Sunak to take action.
At a time when ordinary families are facing the burden of extraordinary energy bills, it’s only right that measures like a windfall tax be considered as a way of funding extra support.
You might have received a letter from your council recently confirming plans to increase your council tax.
Nationally it is set to increase by £67 to an average of £1,966 from April. I spoke to the Daily Express and the Daily Mirror about the tax rise.
This is going to worsen the cost of living scandal faced by families right now.
An increase in council tax will hit poorer households much harder than wealthier ones. It's a political choice to be allowing council tax to rise while also putting up national insurance.
Our friends at the campaign group Fairer Share have built a neat interactive map where you can find out how council tax is changing in your area.
Rishi Sunak needs to rethink. He should also implement a windfall tax on oil and gas companies like BP, who are enjoying a massive windfall while people across the country struggle to pay their energy bills.
He should close the tax loopholes open to the rich and powerful.
In the US President Joe Biden is planning to try to tax the runaway wealth of America’s billionaires. Rishi Sunak should take inspiration from these moves.
The Guardian reported that the President will try to bring in a new law next year for a minimum tax on the unearned wealth of America’s ultra rich elite.
It will be interesting to see if the plan gets voted through. Biden’s previous attempts to legislate for higher taxes have met with opposition from some conservative Democrats who have already stymied his domestic agenda.
In the UK, the Labour Party are increasingly talking about the need to tax wealth more. The Shadow Chancellor Rachel Reeves has made it known that she wants to shift the focus of the tax system from income to assets.
Our research found that the public would back such a move.
The Chancellor gave a Budget for an election due in two years, while families wonder what they'll eat in two days
Since the new year one issue has dominated people’s lives: the rising cost of food and heating. From next month, people will also be facing higher council tax and national insurance.
This week the Chancellor, Rishi Sunak, set out his response to the growing cost of living scandal.
Sunak’s announcements mostly consisted of tax cuts for middle earners. 5p off fuel duty. A higher threshold for when national insurance kicks in. A promised 1p off income tax in 2024. This will help some families, but it’s nowhere near enough.
“Is that it?” one MP bellowed towards the end of Sunak’s Spring Statement on Wednesday.
It’s hard to recall a time when the experts and the media were more united in criticising a chancellor’s performance
Rishi Sunak’s announcements will do little to stop the slide into poverty we are about to see. The official figures suggest that people are about to experience the biggest fall in living standards on record. Rising bills for energy, food and petrol will wipe out much of the tax cuts announced.
Decisions about tax and spending are political choices.
Despite calls for a windfall tax on companies like BP, who’ve enjoyed huge profits, Rishi Sunak sat on his hands. He failed to provide more support to those on the lowest incomes. The chancellor has done little to close the tax loopholes used by the wealthy.
It’s important to see all of this in the broader context. Millions of people face financial insecurity after being denied a real pay rise for decades. In the wake of the budget our friends at CLASS and Autonomy launched a new tool so you can assess where you and your family sit in terms of financial insecurity. Do take a look.
Politics is about choices, and the Chancellor made the wrong choices this week. He prioritised tax cuts on middle earners, while ignoring many struggling families.
Imagine being unable to afford the small things in life - a regular trip to the swimming pool with a toddler, spare cash to buy a grandchild a birthday present, or the cost of a family camping holiday.
These are the basics that people feel everyone should be able to afford.
But a new report by the New Economics Foundation finds that 23 million people can't afford even these basic items. That's a third of people in this country.
That’s millions of dads unable to take their kids for a swim. A swathe of grandmas feeling guilty they can’t afford a little gift for their grandchildren. Young people are paying the equivalent of a second mortgage on commuting costs.
It’s hard to overstate how shocking this is. But this scandal has been a long time in the making.
On top of increasing energy costs due to rocketing oil and gas prices, taxes are due to rise on most people with higher National Insurance and council tax coming in.
Next week Rishi Sunak, the chancellor, will give his spring update on how the economy is doing. He is under pressure to do something about this crisis. However, at the moment it’s unclear whether Sunak will announce any support for struggling families.
The chancellor has to make some choices. Will he provide more support to help people pay their bills? Will he make the wealthiest people and companies who’ve done well financially during the pandemic pay more in tax?
The government should be imposing a windfall tax on energy giants making a killing. Rishi Sunak should also close the loopholes that mean the wealthiest can pay very low rates of tax.
The long time tax justice campaigner Prem Sikka has frequently pointed the finger at what he calls the “pinstripe mafia”. This is the army of professionals who enable the flow of dirty money through London. Accountants, lawyers, bankers and PR agents have helped corrupt officials, tax dodgers and other criminals.
In parliament this week the Conservative MP Bob Seely expressed his frustration at lawyers working for Russian clients to intimidate the media.
The war in Ukraine has yet again highlighted the role of London as the dirty money capital of the world. The government has scrambled to respond. On Monday, the Prime Minister introduced a long promised Economic Crime Bill. This includes many measures that we’ve campaigned for, including more transparency over offshore owners of UK property.
It’s been known for years that the UK has been a favourite destination for ill gotten gains. It’s taken an international crisis in Ukraine to make the government act. This will be a real step forward.
At Tax Justice UK we have been working alongside other campaigners to push the government to act. This could be the best chance in a generation to seal up the loopholes that allow London to be home to so much dirty money. The public clearly cares, with over 117,000 signing our petition for action.
New laws are good but we also need a change in culture. Professionals should think really hard about the role that they play as gatekeepers against bad behaviour. The government also needs to invest much more in enforcing existing laws. Our friends at Spotlight on Corruption have set out what this should look like.
Finally we also want to add a personal note of thought if you or your family have been affected by the conflict in Ukraine. Let's hope the coming days bring swift action to de-escalate, end the fighting and restore a free Ukraine.